Profit
The money left after subtracting cost from revenue.
Formula
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Example
Revenue $5000 minus cost $3000 leaves a profit of $2000.
How it works
Profit measures how much money a business keeps after paying for the things it needed to make those sales. It works by comparing the total money coming in from sales (revenue) with the total money going out for expenses (cost). If revenue is larger than cost, the result is a positive profit; if cost is larger, the result is a loss instead.
When to use it
Use this formula when checking whether a sale, project, or business activity made money overall. It is common in business, accounting, and simple financial word problems.
Worked example, step by step
Revenue = $8,750 Cost = $6,420 Profit = Revenue - Cost Profit = $8,750 - $6,420 Profit = $2,330 So, the profit is $2,330.
Common mistakes to avoid
- Subtracting revenue from cost instead of cost from revenue
- Forgetting that all expenses must be included in the total cost
- Calling the result profit even when revenue is smaller than cost, which is actually a loss
Did You Know?
Profit is what remains after every cost is paid — the ultimate scorecard of a business.
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